EXHIBIT 10.3
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EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement") is made effective as May
15, 2006, by and between Unico American Corporation ("Company") and Xxxxxx X.
Xxxxx ("Employee") with reference to the following facts:
A. Company is engaged in the business of insurance and related
operations. Employee will primarily perform the job duties at the
following location: 00000 Xxxxxxxxxx Xxxxx, Xxxxxxxx Xxxxx,
Xxxxxxxxxx.
B. Company desires to have the services of Employee.
C. Employee is willing to be employed by Company.
Therefore, the parties agree as follows:
1. EMPLOYMENT. Company shall employ Employee as Treasurer and Chief
Financial Officer of Company. Employee shall provide to Company the following
services: Duties as needed including day to day management of the funds and
accounts of the Company and its subsidiaries; and serve as Treasurer and Chief
Financial Officer or other officer of all Company subsidiaries, as required by
Company. Employee accepts and agrees to such employment, and agrees to be
subject to the general supervision, advice and direction of Company and
Company's Board of Directors.
2. BEST EFFORTS OF EMPLOYEE. Employee agrees to perform faithfully,
industriously, and to the best of Employee's ability, experience, and talents,
all of the duties that may be required by the terms of this Agreement. Under no
circumstances shall Employee be obligated without his consent to relocate his
residence in order to render the services or, except for occasional business
trips, to perform his duties outside of the Woodland Hills, California area.
3. COMPENSATION OF EMPLOYEE.
3.1 Salary. As compensation for the services provided by
Employee under this Agreement, Company will pay Employee an annual salary of no
less than $199,500 payable in accordance with Company's usual payroll
procedures. The annual salary shall be subject to increase from time to time at
the discretion of the Board of Directors of Company.
3.2 Bonus. The Company shall pay to the Employee a bonus (the
"Mandatory Bonus") on or before December 31 of each year, provided that the
consolidated net income of the Company (prior to deductions for income taxes and
current Mandatory Bonuses paid to all executive officers of Company, including
Employee but including deductions for discretionary bonuses paid to all
employees) for the most recent four (4) fiscal quarters ending prior to such
payment date is equal to or greater than $4,000,000 (the "Net Income Goal"). The
amount of the Mandatory Bonus shall be in an amount determined by the Board of
Directors, in its discretion, but shall not be less than an amount equal to one
hundred percent (100%) of the aggregate Mandatory Bonus paid to the Employee
during the immediately preceding calendar year, less any amounts paid to the
Employee as a discretionary bonus since the immediately preceding January 1;
provided however, that in no event shall the Mandatory Bonus be reduced to less
than zero (0).
Nothing herein shall prevent the Board of Directors from
electing, in its discretion, to grant a discretionary bonus to the Employee, in
such amount as may be determined by the Board of Directors in the event the Net
Income Goal is not met. Notwithstanding the foregoing, if the Employee's
Agreement is terminated by the Company other than for Cause or by Employee on
account of a breach of this Agreement by the Company, the Employee will be
entitled for the remainder of the term of this Agreement (without giving effect
to the termination) to the minimum Mandatory Bonus amount calculated in
accordance with the foregoing, regardless of whether the Net Income Goal is
attained.
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3.3 Upon Termination by Company For Cause or By Employee for
other than Breach by Company. Upon termination of this Agreement by Company for
Cause or by the Employee for other than a breach of this Agreement by Company,
payments under this Section 3 shall cease; provided, however, that Employee
shall be entitled to payments of accrued but unpaid salary and vacation for
periods or partial periods that occurred prior to the date of termination.
3.4 Upon Termination Without Cause or Breach by Company. Upon
termination of this Agreement by Company without Cause or by Employee on account
of a breach of this Agreement by Company and the execution of a general release
of the Company by the Employee to the reasonable satisfaction of the Company,
except as provided in Section 3.6 hereof, (a) Employee shall be entitled to
immediate payment in full of his salary for the remainder of the term of this
Agreement, without discount or mitigation,(b) Employee shall be entitled to his
Mandatory Bonus computed as set forth herein and paid as and when provided
herein for the remainder of the term of this Agreement (without giving effect to
the termination) and (c) Employee shall be entitled to his benefits for the
remainder of the term of this Agreement (without giving effect to the
termination)as described in Section 5.
3.5 Accrued Vacation. Accrued but unpaid vacation will be paid
in accordance with the laws of the State of California and Company's customary
procedures.
3.6 Limitation On Payments. Notwithstanding the foregoing, in
the event that it is determined that the aggregate value of payment or
distribution by the Company to Employee pursuant to this Agreement whether paid
or payable (a "Payment")constitutes an "excess parachute payment" as defined in
Section 280G(b) of the Internal Revenue Code of 1986, as amended (the "Code")
subject to the excise tax imposed under Section 4999 of the Code (the "Excise
Tax"), the aggregate present value of the Payment shall be reduced to an amount
expressed in a present value without causing any Payment to be subject to the
limitation of deduction under Section 280G of the Code. In the event any portion
of the amounts payable is reduced pursuant to this Section 3.6, the Employee and
the Company shall mutually agree on the type of payment that will be reduced. If
the Employee and the Company are unable to reach an agreement as to the type of
payments to be reduced, all payments to the Employee shall be reduced
proportionately to achieve the necessary reduction. All determinations made
pursuant to this Section 3.6 shall be made by the Company's independent
accounting firm, in their reasonable discretion in consultation with the
Employee's accountants.
3.7 Compliance with Section 409A. Notwithstanding any other
provision of this Agreement, to the extent that (i) any amount paid pursuant to
this Agreement is treated as nonqualified deferred compensation pursuant to
Section 409A of the Code and (ii) the Employee is a "specified employee"
pursuant to Section 409A (2) (B) of the Code, then such payments shall be made
on the date which is six (6) months after the date of the Employee's separation
from service.
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4. EXPENSE REIMBURSEMENT. Company will reimburse Employee for
"out-of-pocket" expenses incurred by Employee in accordance with Company's
policies in effect from time to time.
5. BENEFITS. Employee shall be entitled to employment benefits,
including holidays, personal leave, sick leave, vacation, health insurance,
disability insurance, life insurance, and pension plan as provided by Company's
policies in effect from time to time. These benefits shall cease upon the
effective date of termination of employment provided that this Agreement is
terminated by Company for Cause or by Employee for other than a breach of this
Agreement by Company. Upon termination of this Agreement by Company without
Cause or by the Employee on account of a breach of this Agreement by Company,
subject to the limitation described in Section 3.6, these benefits shall
continue to be provided by Company to Employee for the remaining term of this
Agreement (without giving effect to the termination). Notwithstanding the
foregoing, disability insurance shall be an amount sufficient to provide
compensation to Employee, if disabled, equal to 70% of the compensation that
Employee would be entitled pursuant to Sections 3.1. Further, during the term of
this Agreement, the benefits hereunder shall not be reduced from those provided
to Employee as of May 15, 2006.
6. TERM/TERMINATION. Employee's employment under this Agreement shall
be for three years, beginning on May 15, 2006. Notwithstanding the foregoing,
this Agreement may be terminated at any time by Company for Cause or by Employee
for other than breach of this Agreement by the Company upon thirty days written
notice. This Agreement may also be terminated by Company without Cause upon
thirty days written notice or by the Employee at any time on account of the
breach of this Agreement by Company; however, in either of such events, subject
to the limitation described in Section 3.6, the Company shall pay Employee, as
provided in Section 3.4, all salary, bonuses and benefits as provided herein for
the remainder of the three year term of this Agreement.
7. CAUSE OR BREACH BY THE COMPANY. The term "Cause" as used in this
Agreement shall mean (i) chronic alcoholism or drug addiction, (ii) fraud, (iii)
unlawful appropriation of any money or other assets or properties of the Company
or any affiliate of the Company, (iv) a material breach by the Employee of the
terms of this Agreement which is not cured within ten (10) days after Company
has given Employee written notice describing such material breach with
particularity, (v) the conviction of the Employee of any felony involving moral
turpitude or other serious crime involving moral turpitude, (vi) the Employee's
gross moral turpitude relevant to his office or employment with the Company or
any affiliate of the Company, and (vii) the Employee's willful engagement in
misconduct which is demonstrably and materially injurious to the Company and its
subsidiaries taken as a whole. No act, or failure to act, on the part of the
Employee shall be considered "willful" unless done, or omitted to be done, by
the Employee not in good faith and without a reasonable belief that the action
or omission was in the best interests of the Company and its subsidiaries. The
Company shall be in breach of this Agreement if there is a material breach by
the Company of the terms of this Agreement which is not cured within ten (10)
days after Employee has given Company written notice describing such material
breach with particularity.
8. TERMINATION FOR DISABILITY OR DEATH. Company shall have the option
to terminate this Agreement, if Employee becomes permanently disabled and is no
longer able to perform the essential functions of his position with reasonable
accommodation, provided that Company has provided the disability insurance
benefit described in Section 5. Company shall exercise this option by giving
sixty days prior written notice of such termination to Employee. This Agreement
shall terminate on the death of Employee. A termination of this Agreement
pursuant to this Section 8 shall not be deemed a termination by Company of this
Agreement without Cause.
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9. INDEMNIFICATION. To the fullest extent permitted under the law, the
Company shall indemnify the Employee, if the Employee is made a party, or
threatened to be made a party, to any threatened, pending, or contemplated
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, by reason of the fact that the Employee is or was an employee,
officer or director of the Company or any affiliate of the Company, in which
capacity the Employee is or was serving the Company, against any and all
liabilities, costs, expenses (including reasonable attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding. In the case of any claim being
made, Company shall advance reasonable costs of defense (including reasonable
attorney fees) provided that Employee agrees to repay such advances if it is
finally determined that Employee was not entitled to indemnification with
respect to such claim. This Section shall not limit in any way the Employee's
rights under any agreement relating specifically to indemnification. This
section shall survive the termination or expiration of this Agreement.
10. CONFIDENTIALITY. Employee recognizes that he has and will have
information regarding matters such as trade secrets, customer lists, product
design, and other vital information (collectively, "Information"), which are
valuable, special, and unique assets of Company. Employee agrees that he will
not at any time or in any manner, either directly or indirectly, divulge,
disclose, or communicate in any manner any Information to any third party
without the prior written consent of Company (which consent may not be signed by
Employee on Company's behalf). Employee will protect the Information and treat
it as strictly confidential. A violation by Employee of this paragraph shall be
a material breach of this Agreement and will justify legal and/or equitable
relief. This section shall survive the termination or expiration of this
Agreement.
11. RETURN OF PROPERTY. Upon termination of his employment, Employee
shall deliver to Company all property which is Company's property or related to
Company's business (including keys, records, notes, data, memoranda, models, and
equipment) that is in Employee's possession or under Employee's control. Such
obligation shall be governed by any separate confidentiality or proprietary
rights agreement signed by Employee. This section shall survive the termination
or expiration of this Agreement.
12. NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed delivered when delivered in person or on
the third day after being deposited in the United States mail, postage paid,
addressed as follows:
Company:
Unico American Corporation
Xxxxx Cheldin, President
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Employee:
Xxxxxx X. Xxxxx
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Such addresses may be changed from time to time by either party by providing
written notice in the manner set forth above.
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13. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties and there are no other promises or conditions in any other agreement
whether oral or written. This Agreement supersedes any prior written or oral
agreements between the parties.
14. AMENDMENT. This Agreement may be modified or amended, if the
amendment is made in writing and is signed by both parties.
15. SEVERABILITY. If any provisions of this Agreement shall be held to
be invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of
this Agreement is invalid or unenforceable, but that by limiting such provision
it would become valid or enforceable, then such provision shall be deemed to be
written, construed, and enforced as so limited.
16. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce
any provision of this Agreement shall not be construed as a waiver or limitation
of that party's right to subsequently enforce and compel strict compliance with
every provision of this Agreement.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. HEADINGS. The headings in the Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
19. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of California.
COMPANY:
Unico American Corporation
By: /s/ XXXXX CHELCIN Date: May 30, 2006
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Xxxxx Cheldin, President
EMPLOYEE:
/s/ XXXXXX X. XXXXX
-------------------- Date: May 30, 2006
Xxxxxx X. Xxxxx
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